Colliers Denmark Market Report 2024

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HOTEL - COLLIERS MARKET REPORT 2024

Hotel Comwell Køge Strand

Few hotel deals in 2023

Solid underlying operations for hotels helped increase investor interest in 2023. The interest for high-volume hotels comes mainly from foreign investors who are attracted by good cash flows and high returns in an inter national perspective. In contrast, Danish pension funds remain reluctant and prefer to invest in e.g. offices or housing, both associated with lower risk. However, despite the increased investor interest, there were few transactions in 2023. This is largely due to the general market trend of a considerable gap between buyer and seller expectations of returns and prices. For hotels, tight lending conditions have further slowed down transactions. One of the major transactions was the sale of Scandic Jacob Gade in Vejle for DKK 100 million at the beginning of the year. The buyer was a group of private investors who also have hotel properties in Billund, Kolding and Aarhus. Similarly, at the beginning of 2023, Zleep Hotels in Taastrup was acquired by Norwegian property investor CIC Hospitality, opening its first partner hotel in Denmark. And in November 2023, the Pan-Nordic real estate inves tor NREP took over the 399-room Comfort Hotel. The hotel in the Copenhagen district of Vesterbro was sold by American Starwood Capital. At the end of 2023, a sale and purchase agreement was signed on Hotel Comwell Køge Strand. Comprising approx. 7,860 sq m, the hotel

was acquired by AKF Holding and domestic pension fund Sampension at an estimated price of DKK 141 million, reflecting an estimated yield of around 6.00%. Two good years for the hotel industry have led to increased demand from operators looking to run hotels. With the right product and location, interest is so high that investors have a strong negotiating position with operators. We see a tendency for institutional investors to increas ingly prefer fixed leases with more than 10 years of non-terminability. The prospect of fixed rental income for years to come strengthens borrowing opportunities in a market that is characterised by mortgage banks being reluctant to lend to hotels after the corona slump in rev enue. However, we continue to see examples of inves tors specialising in hotels entering into agreements with operators where the investor assumes a large part of the operational risk. A possible recession in Europe poses a threat to hotels, but if the high demand for overnight stays continues, hotels are likely to strengthen their earnings, which could whet investor appetite for investing in hotels. If interest rates stabilise, and especially if the general eco nomic uncertainty subsides, more hotel transactions are likely in 2024.